Funding Strategies for Business


As the UK takes its first tentative steps out of recession, for many 2011 will be another tough year. Developing an effective business survival strategy, planning for unexpected contingencies and maintaining customer relationships may well be paramount in the minds of business owners.

Some business leaders are however relishing the current economic challenge, seeing 2011 as an opportunity for new business ideas to take off. Some of these ideas will shape future lives not just for these businesses but for all of us - just think how product innovations such as mobile phone technologies, forged in the recession of the early 1990’s, have now touched us all.

Failure to keep looking for the next big (or small) thing can seriously hamper a company both now and coming out of the recession. For businesses which are revisiting the good ideas file, diversifying your portfolio of products or services is a proven method for managing risk as well as gearing up for better times.

In looking to grow your business or ramp-up product development, you may well need further investment. Alongside loans and equity finance, there are business grants to consider, but what is the potential for grant aid?

Grants are made available to businesses by central, regional and local government, the European Union, local authorities and other bodies. Before we examine the process further, it is worth noting a few guiding principles.

The award of public funding, whether from Europe or from UK Government differs from bank funding in that it is usually made for a specific project. In addition, the sponsoring organisation will look to your company to help meet specific aims of its fund, such as technological, environmental, economic or social activities.

Grant awards are offered according to specific criteria through a competitive application process. Only the best quality applications are approved, with some funds heaviliy oversubscribed.

Make sure you can actually deliver results, as the grant can be withdrawn if you don't achieve the agreed targets

The nature of your business, location, size and ownership of your company all affect the level of grant funding available. For instance, a company based in an assisted area such as Merseyside or South Yorkshire may benefit from a greater level of support to promote investment in skills, employment, efficiency, innovation and competitiveness.

Likewise, companies with more than 250 employees or with foreign ownership are excluded from many funding programmes, as the emphasis is on supporting UK-owned small and medium sized enterprises (SMEs).

Timing is crucial, as most applications are submitted according to strict calls for funding. Some statutory grants and other schemes happen once a year so you may need to start planning 18 months in advance.

Matching public funding with your own cash and resources is crucial to the success of winning funding for a project, as it demonstrates your company’s commitment and value for money to the sponsor. It is rare for a grant to cover more than 50% of the cost of a particular venture.

We have listed five key steps to winning funds for your business.

Step 1 - Decide whether grants are the right type of finance

The type of funding you look for depends on how you intend to use it, for example training and development, business expansion, product research and development or international market research. It is important to have a particular project in mind with defined objectives to decide the right type of grant support for your business needs.

Step 2 - Find out what funding is available

Now that you have established what funding is needed and the direction your business is moving, there are a large number of searchable databases on funding websites (notably www.grantsonline.org.uk, www.j4bgrants.co.uk, www.grantfinder.co.uk) as well as information from EU funding websites, government departments, local authorities and regional development agencies.

Once you've found a suitable funding programme(s), it may be a good idea to get in touch with the named contact, usually the grants officer. They will have an in-depth knowledge of the scheme and can give a clear indication of what they look for in a successful application.

Step 3 - Making the application

When you have identified the right grant scheme for your needs, you will need to provide:

Your business plan should be tailored to whoever is going to read it. Remember to be prudent when you are making predications about your company’s growth.

Remember your application will require anything from a few hours to several days or even weeks for the bigger schemes, so be sure that you can commit enough time to the application and that it is worth this investment.

Step 4 – Submitting your application

It's very important to ensure that you get your application in on time. Most funders will not accept late applications. Make sure that you attach all the important paperwork. 

Step 5 - Keeping in contact

Keep a note of which funding bodies you've approached, when you approached them, and what the result was. Then you'll know who to go back to, and when.

It is also very helpful to build up a rapport with grant officers - if you do get help from someone, thank them. Send them your annual report or press cuttings. You're trying to build up a relationship with funders so anything you do to increase communication is important.

 

In conclusion, there are some exciting opportunities but it can take time and money to explore all these sources individually. If you are ready to seriously explore funding opportunities, ask for advice from experts within the Effective Business Group, Business Link, your nearest European Information Centre, a specialist grant finder company or from your local authority Economic Development Office. Working as a consortium is a cost-effective approach, so do also consider collaborating with others through EBG. Good luck and may you reap future rewards!


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